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This Ruling refers to Section 10AA – Land Tax Management Act 1956. This section exempts land that is being used for primary production and explains the essential characteristics of the land classified as primary producing land. For land to be exempt, the land must be classified as “rural land” and the primary purpose of the land must be primary production.

The land must lie in a “rural residential”, “non-urban” area, but if this is not satisfied the land must satisfy other commercial tests which essentially include the land’s ability to make a profit on a continuous basis. This Ruling clarifies that primary production uses of all and individual parcels of land and unused and different factors determine this, which includes the area of land to which the use extends and generation of profit and capital investment. The mere intention of using land for primary production is not enough, however, undertaking preparatory work may allow for the land to satisfy the Primary Production Land exemption.

There are various types of primary produce which have specific requirements of which land owners must be aware in order for their land to acquire the Primary Production Land exemption.

Owners of agricultural land are also capable of leasing their land to private contractors who will make their land primary producing. With regards to commercial plant nurseries and the growing of mushrooms, orchids or flowers, the majority of plants maintained and sold must not have been grown elsewhere nor have been majorly consumed by the land owners. If rural land that has been previously exempt is rezoned as “non- rural” land, the exemption may still apply if primary production continues and commercial land development ceases. The characteristics of a primary producing business are: it has to have scale, managed in a business-like manner with the intention to make profit and there is repetition and regularity in the business activity.

If you require further information about this Revenue Ruling please contact our property team on 9635 7966 to discuss with one of our lawyers. 

DISCLAIMER: This article is provided to clients and readers for their general information and on a complimentary basis. It contains a brief summary only and should not be relied upon or used as definitive or complete statement of the relevant law.